What FERC’s Approval of Cove Point LNG Tells Us About the “Rubberstamp” Agency

On September 29, the Federal Energy Regulatory Commission put its stamp of approval on the Cove Point LNG project, Dominion Resources’ bid to convert its liquefied natural gas import terminal on the Chesapeake Bay into an export facility. It’s the fourth approval FERC has granted to build an export facility, and the first on the Atlantic Coast. The first three are located on the Gulf Coast.

Why is Cove Point important? Some have been calling it “the next Keystone XL.” What the Keystone XL pipeline is to the Alberta tar sands, Cove Point is to the Marcellus Shale, a porous rock formation harboring as much as 500 tcf of methane gas. If constructed, the Keystone XL would be a major conduit of dirty bitumen from the tar sands, and consequently it’s become the rallying call for opposition against extraction of the tar sands. Likewise, if Cove Point is built, it would be the conduit for natural gas obtained by fracking the Marcellus Shale to be delivered to Asia. Among the export terminals approved by the Department of Energy and in line for approval by FERC, Cove Point has become the rallying cry for opposition against liquefied natural gas exports. (In July, more than a thousand people marched in Washington, DC against Cove Point and LNG exports.) LNG exports are intimately connected with the extreme method of fossil fuel extraction called hydraulic fracking, because exporting to Asian markets would make fracking more profitable and thereby incentivize more drilling.

FERC’s permitting of Cove Point is a big regulatory hurdle, the biggest among many state and local permits it had to obtain after the Department of Energy said it was okay for Dominion to export. But it’s not a surprise. When I say FERC put its stamp of approval on Cove Point LNG, what I really mean is that FERC applied its rubberstamp of approval. FERC is responsible for reviewing proposals for interstate natural gas pipelines and LNG terminals (up to this point, only import terminals). Among the all the major projects submitted to FERC, you’d be hard-pressed to find one that was turned down. FERC’s nickname—the Federal Energy Rubberstamp Commission—is well-earned.

In my opinion, however, FERC is even more than a rubberstamp—it’s the gas industry’s best friend. Understanding that the game is rigged and how the game is rigged is important if we’re going to contest the coming wave of infrastructure associated with the fracking boom. The order FERC issued authorizing Cove Point reveals a great deal about an agency which works for them, not us. A close reading of the order illustrates several crucial points about the nature of the FERC beast:

1. FERC doesn’t consider the facts

The scope of inquiry into the review of Cove Point was crippled from the get-go when FERC decided to conduct an Environmental Assessment (EA) instead of a more in-depth Environmental Impact Statement (EIS). FERC went with an EA for a $3.8 billion dollar project involving highly volatile LNG located in a populated neighborhood near a nuclear power plant on an already environmentally stressed body of water, even though an EIS was required for a relatively small expansion the terminal in 2006. In fact, the Commission justifies doing an EA for this proposed mammoth conversion because an EIS was done for the expansion.

Cove Point’s small “footprint” was also a reason to do the lesser Environmental Assessment: “Commission staff determined that an EA was appropriate in this case because the facilities would be within the footprint of the existing LNG terminal”–that is to say, cramming more stuff into same amount of space–“and because the relevant issues that needed to be considered were relatively small in number and well-defined.” By the Commissioners’ logic, “small space, more stuff” means less to consider and less all-around impact on everything, or maybe nothing. This is a precarious way of analyzing a complex system with many moving parts, where a mishap could quickly escalate into a catastrophe.

2. FERC doesn’t connect the dots

According to FERC, Cove Point exists in some separate dimension of time and space, a floating 131-acre island where natural gas appears out of thin air. It comes from the land of speculation and is headed… somewhere. Pay no attention to that 90,000-square-mile shale formation nearby containing as much as 500 tcf of natural gas! Gas flowing to Cove Point could come from “any production area in the lower-forty-eight states.” We can only speculate.

Fracking? Cove Point has nothing to do with fracking. No matter that Cove Point is uniquely positioned to transport gas from the Marcellus Shale to international markets. Never mind that without the fracking boom and the desperate need for gas companies to get a higher price in Asia, there would be no need for Cove Point.

Please don’t ask the Commission whether the greenhouse gasses produced by drilling, piping, supercooling, shipping and burning up to 1.77 bcf of natural gas per day would have any potential impacts on the climate. There’s just no way to know. “[B]ecause we cannot determine the project’s incremental physical impacts on climate change,” say the Commissioners, “it is not possible to determine whether or not the project’s contribution to cumulative impacts on climate change will be significant.” You’ll have to come to your own conclusions. But keep them to yourselves.

3. FERC doesn’t consider the issues seriously

650 public comments for and against Cove Point were submitted to FERC in the 30 days following the release of the EA in May. Many of them were meticulously researched and drafted—by individuals, advocacy groups, academics, governmental agencies, elected officials and scientists. (They are all available in FERC’s eLibrary online.) The Commissioners dismiss them all. Every single one. They brush aside objections even by industry competitors BP, StatOil and Shell.

In some instances, specific public comments are brought up but no effort is made to address them. For example, Dominion has widely touted the jobs and additional tax revenue that Cove Point would bring to Calvert County. But professors from the University of Maryland and the University of Florida blow those claims out of the water, showing that almost all jobs created by Cove Point would be highly specialized and would go to workers outside the area, who would likely commute. Potential tax revenue evaporates when you consider that billions of dollars of materials projected to be purchased within the County are not for sale there.

The order responds accordingly with a non sequitur: “The DOE-FE… concluded that the exports proposed by Dominion ‘are likely to yield net economic benefits to the United States.’ Therefore, the EA properly concludes that the project would provide socioeconomic benefits locally and nationwide.”

4. FERC doesn’t care about public safety

There has never been an LNG facility built in such a populous area as Lusby, Maryland. The import terminal was only in operation for a couple of years before it went dormant for 23 years. It was re-started in 2001 and underwent a moderate expansion completed in 2009, just in time for LNG imports to peter out. The state of Maryland stepped in to do a Quantitative Risk Analysis in 2006 with the expansion, which determined that there were 360 homes within a 4,265-foot “consequence zone” at risk of flash fire. Nearly 2,500 residents live within one mile of the facility. The main escape route from the small peninsula is the road that passes by the main gate. In other words, to escape a major conflagration such as an ignited vapor cloud, you’ve got to go toward and through the major conflagration.

Seven tanks with the capacity to hold 14.6 bcf of LNG stand on the 131-acre site. Dominion proposes to build a liquefaction train—compressors which supercool methane gas into a liquid state—and an off-grid generating station to power it on the 59 acres of the site closest to the adjoining neighborhood. From this, 20.4 tons of hazardous pollutants would be emitted annually. In its evaluation, FERC is using outdated fire safety standards, supposedly because implementing updated standards would require some bureaucracy and a public comment period.

The fire safety standards are also tangled up in the reason that FERC Commissioners will not order a Quantitative Risk Analysis. They claim that there are not current established criteria to obtain “consistent and meaningful” results. They would rather rely on a technical analysis provided by Dominion. In other words, Dominion says it’s safe, and FERC agrees.

“The bottom line is, we’re just appalled that they’re showing such blatant disregard for our safety and our lives,” says Tracey Eno of Calvert Citizens for a Healthy Community.

5. FERC doesn’t care about the environment

We’ve already seen how FERC refuses to acknowledge any linkage between Cove Point and the environmental impacts of fracking, nor does it grant that greenhouse gases produced by exporting large amounts of LNG might contribute to climate change.

There are a number of other environmental concerns in the report which FERC handily dismisses, including the drain on local aquifers, possible groundwater contamination, disruption of habitats and fisheries, impacts on wetlands and watersheds, and endangerment of protected species. Oddly, the Commission acts as if the import terminal has been operating at full capacity, receiving its full permitted quota of 200 LNG tankers a year. They seem to expect 85 vessels a year to be diminished traffic and less of a hazard to the North Atlantic right whale. Apparently, tanker traffic and dumping millions of gallons of contaminated ballast water into the Bay is the Coast Guard’s problem anyway.

6. FERC is preparing for a lawsuit

The approval order skims over numerous issues but spills a copious amount of ink on two subjects: arguing for the sufficiency of the less rigorous Environmental Assessment and defending the Cove Point proposal as complete and separate from other projects. It’s not hard to discern why the Commission would focus on these topics: they are going to have to make the same arguments in a courtroom soon.

EarthJustice, along with other environmental groups, are preparing to challenge FERC’s decision in court on the basis of insufficient review. “FERC is the agency where the NEPA [National Environmental Policy Act] review happens, where the time and expense are put into it,” says Nathan Matthew of the Sierra Club Environmental Law Program. “We believe that the review is not as extensive and searching as the law requires it to be. FERC has not met its statutory obligations.”

Recently, a judge determined FERC violated federal law when it approved four upgrades to a pipeline that runs from Pennsylvania to New Jersey but failed to consider its cumulative impacts. “Improper segmentation” is one of the bases of the lawsuit Myersville Citizens for a Rural Community has brought against FERC. (The US Court of Appeals of the District of Columbia will hear oral arguments in late October.) MCRC claims that the compressor station which Dominion Transmission is building in their town is intended to help transport gas to Cove Point. In submitting separate proposals to FERC, Dominion mitigates the cumulative impacts.

FERC’s response: “Even if the capacity created by the Myersville Compressor is ultimately used to transport some gas to Cove Point, that is just the reality of the interstate natural gas transportation system network.”

7. FERC works with and for industry, not in the public interest

Gas companies don’t come up with these segmentation schemes on their own. FERC colludes with industry to develop proposals that can pass review quickly and easily. On the one hand, FERC is happy to say the pre-filing process is one reason for the high approval rate for projects. On the other, it denies that it has any knowledge of industry plans. Feigning ignorance about Cove Point’s raison d’etre—fracking–is just one example. Allegheny Defense Project pegs the agency’s knowledge of industry activity in the comment it submitted in the Cove Point review process:

FERC has been and continues to be aware of many companies’ plans to exploit shale formations such as the Marcellus Shale. FERC itself has identified expanding pipeline and storage infrastructure as essential to ensure that there is increased reliance on natural gas and that the gas is readily available…. By reviewing many of these projects individually and under restrictive parameters, FERC has substantially minimized the scale of the direct and indirect impacts of these projects as well as the cumulative impacts of past, present, and reasonably foreseeable projects, including increased shale gas extraction.

FERC’s 2014 Mission Statement describes its primary objective related to safe infrastructure in this way: “[To] [f]oster economic and environmental benefits for the nation through approval of natural gas and hydropower projects.” It doesn’t say evaluation, scrutiny or review of gas industry projects. FERC’s purpose is to partner with industry to get their projects done. It even serves as their lawyer. There’s just no possibility that it could ever say, “The public’s interest is better served by natural gas staying the ground.”

8. The FERC Commissioners are isolated, arrogant, condescending and unaccountable to the public

FERC is unaccountable to the public. Commissioners are appointed by the President and can only be removed in exceptionable circumstances. During the Cove Point review process, FERC was unresponsive, refusing to hold public hearings around the state or to extend the public comment period, even when U.S. Senators petitioned it. Not surprisingly, it was unresponsive to calls to conduct an EIS.

FERC is insulting the public by persisting in transparent lies, such as the pretense that Cove Point has nothing to do with fracking the Marcellus Shale. In the approval order, Commissioners dissemble and employ circular logic and evasion to dismiss legitimate concerns. They clearly feel that they owe nothing to the public, not even a comprehensive review of a huge industrial project, which by proximity alone, poses enormous risk to nearby residents.

The Commissioners reach the pinnacle of arrogance and condescension when they respond to a demand for an EIS because the project is “highly controversial.” Citing a particular regulation’s technical definition of “controversial,” the Commissioners state: “There is no such controversy about the Cove Point Liquefaction Project, and the number of individuals or organizations opposing the project cannot create one.”

Too late, FERC. The people are banging on your door.

Escaping the Regulatory Trap

The fact that a regulatory agency charged with protecting public health and safety is actually a lackey of the gas industry is a sad truth which communities who are trying to protect themselves must come to terms with. In order to be effective, they and the anti-fracking movement must stop pretending that FERC acts in good faith.

Over the last year, an enormous amount of effort has been expended by those opposing Cove Point in getting FERC to nix the project. Individuals researched and cultivated impressive expertise in all aspects related to an LNG facility, including the engineering specs of a liquefaction train, the qualities of a vapor cloud, Quantitative Risk Analysis, fire safety standards, power plant emissions, and ballast water dumping regulations. They mastered the ins and outs of the FERC review process, the National Environmental Protection Act (NEPA) and Council on Environmental Quality (CEQ) Regulations. Environmental groups planned protests, sit-ins and marches to FERC. They pleaded with elected officials to intervene.

Now might be a good time to ask, how much of this was wasted effort in a rigged game orchestrated by FERC? Given the agency’s track record, it was at best a long-shot to get FERC to kill the whole project. Members of so many communities have been “good citizens,” played by the rules, yet ultimately been sacrificed to fossil fuel profits. Like sheep, they have been guided down a path into the regulatory trap. It’s a dead end.

So how do we break out of the regulatory trap? Here are a few suggestions:

The first step is recognizing that regulations are mechanisms to carry out laws designed to uphold capitalism, a system favoring profit over people and the environment. Regulatory agencies, in our current system, might appear to exist for the public interest, but they are often acting in the interests of an elite minority. After digesting this for a while, the truth will set us free.

Environmental and community groups opposing Cove Point played the long game well by exposing FERC as a fraud. Keep calling FERC out. It should never be portrayed as being negligent, incompetent or derelict in duty, e.g. “We’re disappointed in FERC,” “They’re burying their heads in the sand,” or, “We are baffled by their lack of response.” These statements ignore the fact that FERC acts with intention. It is more accurate to say, as Mike Tidwell of CCAN did this week, “FERC is a facilitating commission for the gas industry. It is not a regulatory commission, it is a facilitating commission.”

Appealing to FERC to change its ways is a waste of time, because it is not accountable to anyone but Big Gas, and as we have seen, it is contemptuous of the public. Can it be reformed? Can we demand regional Environmental Impact Statements, assessing the totality of the gas industry’s impacts? It’s a question that needs debating, given the agency’s primary mission to facilitate the gas industry.

Let’s stop pinning our hopes on the FERC process and putting so much valuable energy into the public comments—which it will ignore. FERC feasts on our time and energy in exchange for a false promise of fairness.

There’s more chance of success if a project is killed before it even gets to FERC. Industry watch-dog groups are needed to warn communities that a pipeline or compressor station might be coming their way.

If public comments serve any purpose, it is to lay the groundwork for legal action. EarthJustice and its allies are now preparing to challenge FERC in court. We can’t always rely on the courts for justice, but it is a legitimate and often powerful tactic.

Delay and delay some more. Delay in the case of Keystone XL has resulted in enormous victories. Norwegian-owned StatOil and French-owned Total have abandoned their tar sands projects. Legal action, protests and obstruction buy time and cost companies money, sometimes a lot of money.

Stop playing by the rules. It’s time to get more radical, strategically. As Saul Quincy of Ecosocialist Horizon says:

We are going to get arrested! The only thing that we can do to meet the deadline for climate justice is to engage in a massive and permanent campaign to shut down the fossil fuel economy. But we have to do this strategically, not in the symbolic cuff-and-stuffs that are a perversion and prostitution of the noble ideals of civil disobedience and revolutionary nonviolence. So we are going to shut down coal plants; we are going to block ports, distribution centers and railway hubs where fossil fuels are transported; whatever it takes to keep the oil in the soil.

“I think the message from the citizens, in receiving this news, is don’t mourn—organize,” Tracey Eno said. “And this is not the end… We could take more dramatic actions, because at this point we have nothing to lose, because we have everything to lose.”

There is too much to lose by falling into the regulatory trap, too much precious time wasted catering to a corrupt and inherently flawed agency like FERC. The harsh reality is that the agency does not work for us, the people. Let us be emboldened by the truth, and may our strategies tackle this reality head-on.

5 thoughts on “What FERC’s Approval of Cove Point LNG Tells Us About the “Rubberstamp” Agency”

Outstanding piece on the truth about FERC! You help make clear how we must view this “facilitating commission for the gas industry” and how we must fight their rubber-stamping criminality. With something like 19 more LNG export facilities on their docket for approval, we must be steadfast in our fight to stop them from poisoning our water and air, putting citizens’ lives at risk and sending us into a climate change tailspin that is no longer in any way tangible to control. Onward!